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AutoCanada Inc. (TSE:ACQ)
:ACQ
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AutoCanada
(TSX:ACQ)
57Neutral
Positive Factors
Financial Performance
Q3 adjusted EBITDA was a material beat versus estimates.
Vehicle Demand
Several metrics suggest demand for vehicles is holding in better than expected.
Negative Factors
Management Execution
Uneven management execution, especially on operational expenses, has kept the stock at Market Perform.
Operational Challenges
Uneven management execution specifically related to opex has impacted stock performance.
AutoCanada (ACQ) vs. S&P 500 (SPY)
Market Cap
C$343.78M
Dividend YieldN/A
Average Volume (3M)16.13K
Price to Earnings (P/E)―
Beta (1Y)1.48
Revenue Growth-16.86%
EPS Growth-236.70%
CountryCA
Employees2,550
SectorConsumer Cyclical
Sector Strength61
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)-2.93
Shares Outstanding23,611,176
10 Day Avg. Volume14,394
30 Day Avg. Volume16,127
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.07
Price to Cash Flow (P/CF)2.70
P/FCF Ratio4.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$19.20Price Target Upside31.87% Upside
Rating ConsensusHold
Number of Analyst Covering5
AutoCanada Business Overview & Revenue Model
Company DescriptionAutoCanada (ACQ) is a leading multi-location automobile dealership group in Canada, primarily engaged in the sale of new and pre-owned vehicles, vehicle maintenance and repair services, and the sale of automotive parts. The company operates franchised dealerships with a diverse portfolio of brands, offering a wide selection of vehicles to meet varying consumer preferences and needs. AutoCanada's operations are geographically diversified across Canada and into the United States, providing comprehensive automotive solutions in the retail automotive industry.
How the Company Makes MoneyAutoCanada generates revenue through multiple streams. The primary source of income comes from the sale of new and pre-owned vehicles across its extensive network of dealerships. Additionally, the company earns revenue from vehicle maintenance and repair services offered at its service centers, which include everything from routine maintenance to complex repairs. The company also sells automotive parts and accessories, contributing to its revenue streams. Further, AutoCanada provides financing and insurance products, either directly or in partnership with financial institutions, which adds another layer of income through commissions and service fees. Their strategically located dealerships and partnerships with major automotive manufacturers enhance their ability to attract a broad customer base and maintain competitive offerings in the automotive market.
AutoCanada Financial Statement Overview
Summary
AutoCanada exhibits strengths in gross margin management and a slightly improved equity ratio. However, the significant drop in revenue and net income in 2024, coupled with high leverage, poses risks. Cash flow has weakened, but operational cash still supports the company. Overall, financial health is challenged by profitability and leverage concerns.Income Statement
The company experienced a significant decline in revenue from 2023 to 2024, alongside a negative net income for 2024. Despite this, gross profit margin improved over the years, indicating better cost management. The EBIT and EBITDA margins have shown volatility, reflecting the challenges in maintaining consistent profitability.62
Positive
Balance Sheet
The debt-to-equity ratio is high, indicating significant leverage, which could be risky during downturns. However, the equity ratio shows a slight improvement, suggesting a gradual increase in equity base relative to assets. Return on equity is negative for 2024, driven by the net loss.58
Neutral
Cash Flow
Free cash flow has decreased significantly, largely due to the decrease in operating cash flow and higher capital expenditures. The operating cash flow to net income ratio indicates that cash generation relative to net income has weakened, but the company maintains a level of operational cash flow that supports its operations.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.35B | 6.44B | 6.04B | 4.65B | 3.33B | Gross Profit |
| 882.28M | 479.23M | 1.04B | 834.18M | 547.33M | EBIT |
| 171.32M | 206.52M | 254.55M | 270.07M | 70.21M | EBITDA |
| 164.34M | 217.30M | 273.15M | 326.40M | 100.74M | Net Income Common Stockholders |
| -68.23M | 50.49M | 85.44M | 164.21M | -6.62M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 67.34M | 103.15M | 108.30M | 102.48M | 107.70M | Total Assets |
| 3.01B | 3.16B | 2.86B | 2.26B | 1.90B | Total Debt |
| 2.01B | 2.23B | 2.03B | 1.45B | 1.35B | Net Debt |
| 1.94B | 2.13B | 1.92B | 1.34B | 1.24B | Total Liabilities |
| 2.51B | 2.59B | 2.37B | 1.74B | 1.54B | Stockholders Equity |
| 468.03M | 534.85M | 457.90M | 493.41M | 341.87M |
| Cash Flow | Free Cash Flow | |||
| -2.45M | 40.02M | 95.31M | 78.37M | 116.90M | Operating Cash Flow |
| 31.63M | 119.53M | 147.97M | 112.94M | 137.87M | Investing Cash Flow |
| 67.86M | -125.43M | -228.02M | -215.37M | -35.12M | Financing Cash Flow |
| -93.92M | 183.60M | 83.21M | 97.00M | -51.02M |
AutoCanada Technical Analysis
Negative
14.56
Price Trends
17.55
Negative
17.80
Negative
17.23
Negative
Market Momentum
-0.33
Positive
37.82
Neutral
20.32
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACQ, the sentiment is Negative. The current price of 14.56 is below the 20-day moving average (MA) of 16.18, below the 50-day MA of 17.55, and below the 200-day MA of 17.23, indicating a bearish trend. The MACD of -0.33 indicates Positive momentum. The RSI at 37.82 is Neutral, neither overbought nor oversold. The STOCH value of 20.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ACQ.
AutoCanada Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | C$1.47B | 9.56 | 14.17% | 3.62% | 1.78% | 10.47% | |
73 Outperform | C$1.07B | 9.54 | 11.27% | 6.56% | -0.27% | -15.99% | |
61 Neutral | $8.25B | 12.85 | 15.17% | 3.34% | -1.79% | 318.70% | |
61 Neutral | C$1.85B | 21.84 | 9.36% | 1.80% | 2.49% | -22.94% | |
59 Neutral | $11.22B | 10.13 | -1.22% | 3.96% | 1.32% | -18.57% | |
57 Neutral | C$343.78M | ― | 7.01% | ― | -16.86% | -236.70% | |
48 Neutral | $3.68B | 19.66 | -3.01% | 1.72% | -23.54% | -130.34% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:ACQ
AutoCanada
14.56
-10.61
-42.15%
TSE:DOO
BRP
50.33
-46.32
-47.93%
TSE:CTC
Canadian Tire
205.00
-27.81
-11.95%
TSE:RCH
Richelieu Hardware
33.54
-7.33
-17.93%
TSE:LNF
Leon's Furniture
21.55
-0.07
-0.32%
TSE:MTL
Mullen Group Ltd.
12.19
-1.98
-13.97%
AutoCanada Earnings Call Summary
Earnings Call Date: Mar 19, 2025 | % Change Since: -11.76% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with positive developments in Canadian operations and strategic asset realignments. However, challenges persist with declines in sales, economic uncertainties, and losses in U.S. operations impacting overall performance.Highlights
Canadian Operations Adjusted EBITDA Growth
Canadian operations experienced a 12.8% year-over-year growth in adjusted EBITDA in Q4, driven by OEM incentives, lower financing costs, and contributions from parts and service.
Transformation Plan and Cost Savings
AutoCanada's transformation plan is on track to achieve $100 million in annual run rate cost savings by the end of 2025. In 2024, $7.9 million in savings were realized, with an annualized run rate savings of $9 million by December 31.
Profitability Improvements in Canadian Business
Canadian new vehicle unit sales grew 4.7% year-over-year, contributing to better-than-expected performance in Q4.
Sale of Non-Core Assets
The sale of three non-core Stellantis dealerships generated $59.5 million in net proceeds, contributing to strategic asset realignment.
Lowlights
Decline in New Vehicle Sales and Gross Profit
Total sales from continuing operations decreased by 1.2% year-over-year, with new and used vehicle gross profit per unit dropping by 14.3% and 5.4% respectively.
Challenges in U.S. Operations
The U.S. business reported a $24.2 million adjusted EBITDA loss in 2024 and is being reclassified as a discontinued operation.
Negative Impact of Tariffs and Economic Uncertainty
The Canadian automotive sector faces challenges due to U.S. tariffs, trade tensions, and inflationary pressures, with 2025 new light vehicle sales declining 2.8% year-over-year so far.
Closure of Right Ride Locations
The closure of all Right Ride locations incurred a $11 million adjusted EBITDA loss in 2024.
Company Guidance
During the fourth quarter of fiscal year 2024, AutoCanada experienced robust demand for new light vehicles in Canada, spurred by OEM incentives and a 200 basis point reduction in interest rates by the Bank of Canada. This led to a 12.8% year-over-year increase in adjusted EBITDA for Canadian operations in Q4. The company is executing a transformation plan with a goal of achieving $100 million in annual run rate cost savings by the end of 2025, having already realized $7.9 million in savings last year. Key savings are expected from standardizing dealership operations ($63 million), enhanced cost controls ($23 million), improved inventory management ($10 million), and centralizing administrative functions ($5 million). In 2024, AutoCanada reported total sales of $1.3 billion from continuing operations, a 1.2% decrease year-over-year, with adjusted EBITDA from these operations rising to $54.1 million. The Canadian market saw a 4.7% increase in new vehicle sales, although used vehicle sales fell by 8.4% due to inventory challenges. With the U.S. operations reclassified as discontinued, the company is focused on reducing its leverage ratio to 2-3 times EBITDA and is pursuing the sale of its U.S. assets, which recorded a $24.2 million adjusted EBITDA loss in 2024.AutoCanada Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
AutoCanada Adjusts Credit Facility Amid Tariff Concerns
Neutral
Mar 31, 2025
AutoCanada has announced a temporary adjustment to its credit facility, increasing its maximum permitted Total Net Funded Debt to EBITDA ratio from 5.50:1.00 to 6.00:1.00 for the second quarter of 2025, before reducing it to 4.50:1.00 in July. This measure is a precautionary response to the uncertain impact of the current tariff environment on the company’s financial performance, indicating a strategic approach to maintaining financial flexibility amidst potential market challenges.
Business Operations and StrategyFinancial Disclosures
AutoCanada Reports Q4 Results and Strategic Shift Amid Market Challenges
Neutral
Mar 19, 2025
AutoCanada reported a decrease in revenue from continuing operations to $1,261.9 million, with a net loss from total operations of $38.4 million for the fourth quarter of 2024. Despite challenges, the company saw a significant improvement in net income from continuing operations, achieving $7.1 million compared to a loss in the previous year. The company completed a strategic review, resulting in the sale of non-core dealerships and the closure of RightRide locations, which is expected to improve financial performance. AutoCanada is focusing on its Operational Transformation Plan to achieve cost savings and enhance operational efficiency, despite facing a cooling Canadian vehicle market and potential risks from U.S. tariffs.
Financial Disclosures
AutoCanada to Release Q4 2024 Financial Results and Host Conference Call
Neutral
Feb 26, 2025
AutoCanada announced it will release its financial results for the fourth quarter and full year of 2024 on March 19, 2025, followed by a conference call and webcast. This event will provide insights into the company’s performance and future outlook, potentially impacting its market positioning and stakeholder interests.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.